Economic growth has fostered peace on the island of Ireland – but Bre…

Economic growth has fostered peace on the island of Ireland – but Brexit puts both at risk

26 Oct 2018

A new Brexit briefing by the British Academy and Royal Irish Academy argues that prosperity and peace are inextricably linked on the island of Ireland – but that Brexit risks undermining both.

Shared membership of the EU underpins the 1998 Belfast/Good Friday Agreement and has been vital to fostering economic growth on the island of Ireland and so underpinning peace.

The briefing on the all-Ireland economy by Michael d’Arcy and Professor Frances Ruane warns that that Brexit could remove most of the economic elements underpinning the Belfast/ Good Friday Agreement, depending on the UK’s final settlement. This risks both stifling the all-Ireland economy and destabilising the peace agreement.

The authors recommend that a legally-supported ‘backstop’ must be in place as part of the final Brexit deal, to protect the economic growth that is fundamental to safeguarding the 1998 Agreement.

The briefing highlights that:

Membership of the Single Market created the conditions for economic growth on the island of Ireland by dismantling the trade barrier between the Republic of Ireland and Northern Ireland.

Recent research suggests that in the case of a no-deal, cross-border trade between Ireland and Northern Ireland could reduce by 9-16%, with the main impacts being on companies in the food sector and especially in meat and dairy products.

Economic growth since 1998 has contributed to peace because individuals and businesses have been able work closely together, trade, and build trust.

A significant share in cross-border trade is from companies that simultaneously trade in both directions, in intermediate products – evidence of strong supply chains.

Free movement of labour in the EU also boosted the all-Ireland economy, by removing any economic cost of working across borders. This reinforced the commitment of the Belfast/Good Friday Agreement that those born in Northern Ireland can “identify and be accepted as Irish or British, or both”: as citizens of the EU they were entitled to enjoy economic entitlements of both jurisdictions.

If new barriers that regulate the movement of goods, services, employment and finance on the island of Ireland and between the island, GB and the rest of the EU emerge, there will be negative consequences for growth

“The present state of Brexit discussions would have been unthinkable when the Belfast/Good Friday Agreement was signed. When the UK exits, a substantive legal and economic policy framework is required, to protect the all-island economy and the prosperity needed to complete the task of embedding peace.

“The EU/UK negotiations on withdrawal and on future relations must succeed in order to avoid unravelling the achievement of peace in Northern Ireland that Ireland and the UK are jointly committed to sustaining.

“Two decades of progress could be lost if a legally binding backstop is not in place when Brexit occurs at midnight on March 29th next.

“At this point it is not known what will be agreed, but it is imperative to avoid arrangements that result in ‘deepening differences’ due to regulations and controls which could fragment and further unsettle the all-island market, with negative consequences for jobs and growth.”

Professor Frances Ruane MRIA said:

“What many people do not realise is that the Belfast/Good Friday Agreement was a direct beneficiary of the commitment over many decades of all EU member states to consolidate peace in Europe through aligning economic policies.

“If Brexit reduces this alignment, it will impact on the way companies on the island do business, not simply on how they trade. Very small companies in Ireland that currently provide services to customers in both jurisdictions could face different regimes in their two markets in the future, and that are as close as a short drive away.

“For example, customs controls and different standards could apply on any materials that cross the border, requiring the accompanying data/forms to show compliance. Furthermore, services delivered on the ground in Northern Ireland could face different technical standards, health and safety rules, etc. These companies would face additional costs for no additional benefits, even if there is no physical infrastructure on the border.

“The Belfast/Good Friday Agreement is, and must remain, a core foundation of political, social and economic stability on the island. Finding a resolution to the current impasse will require negotiators to have the same spirit of shared determination that secured that Agreement in 1998.”

British Academy – Royal Irish Academy Brexit briefings use the academic expertise of Fellows and Members of the two academies to raise awareness of the topics and questions that need consideration and/or responses as the UK negotiates its exit from the EU. Read the other briefings in the series.

About the authors

Michael D’Arcy has researched and written extensively on the Island Economy since the 1990s. He is co-author of Border Crossings: Developing Ireland’s Island Economy (Gill & Macmillan 1995), a collection of essays that explored the potential for greater prosperity in the event of paramilitary ceasefires in Northern Ireland.

Professor Frances Ruane MRIA is a member of the Royal Irish Academy and former Director of the Economic and Social Research Institute and Professor of Economics at Trinity College Dublin. She served on the Economic Advisory Group to the Department of Enterprise, Trade and Industry in Northern Ireland from 2011-2016.

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